He might already know some of the Pharma companies who are doing exceptionally well and making amazing medicines.
The doctor, who will have a good knowledge of the medicines and the pharmacy sector, could have done a lot better if he has started investing with companies in his circle of competence. It’s most likely that both these investors will get below-average returns. What do you think will be the outcome of both these investments. He is also interested in the market and goes back home to search and invest in a Pharma stock. On the other hand, assume there is another banking who works as a bank manager. What most doctors will do is to go back home, search for a banking or renewable energy stock, read a little about them, and make their investment. Suppose, you are a doctor and on the side, you want to invest in some good stocks to build your portfolio and make returns. Now let us understand what Peter Lynch means by ‘Invest in what you know’ strategy with the help of an example. If these investors find and invest in these growing local companies, they can surely make amazing returns.
#Peter lynch one up on wall street returns professional#
A common person is exposed to many interesting local companies and products years before the professional investors would even be heard of them. Most people just have to look around the place where they work or the spots where they visit to grab those opportunities. He suggests that many great investments could be right under the nose, if the investors are ready to look into the common stocks.
To start with, Peter Lynch advocates the idea of ‘Invest in what you know!’. Lynch believes that with a little research and steady discipline, every common person can outperform the so-called investment gurus and make consistent returns. In the book One up on Wall Street, Peter Lynch teaches how a common investor can get great returns from his investment in the stock market if they follow few general investing principles and a common-sense investing approach.